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In September, the European Commission released detailed new rules governing the terms of competition and privacy for Big Tech. The rules spell out just how the EU’s Digital Markets Act of 2022 will be enforced, and they are terrific.
They designate six global companies, including the five big U.S. platform monopolies, as “gatekeepers” to internet commerce. They specify permissible activities in 22 separate areas, restricting invasions of privacy, reducing monopoly power, and making it easier for consumers to comparison shop.
The new EU rules are aligned with Biden administration competition policy, and two major lawsuits filed by the Justice Department and the FTC, respectively, against Google and Amazon. But unlike the U.S., where the fate of the litigation is uncertain given the captivity of the courts to corporate elites, the new EU rules have the force of law, and are a mortal threat to the predatory business models of the tech monopolies.
However, Big Tech does have an ace in the hole. Since five of the six named companies are American—Google, Amazon, Facebook, Apple, and Microsoft—the tech giants, the U.S. Chamber of Commerce, and kindred allies in Congress and the Commerce Department claim that the EU rules are an unfair trade practice singling out U.S. companies. (The sixth named gatekeeper company, TikTok, is Chinese-owned.)
After the European Commission proposed what became the Digital Markets Act, and its companion the Digital Services Act, which imposes greater responsibility on tech platforms for content, the tech lobby and its allied legislators and Cabinet officials went on the offensive, seeking to have the EU’s pro-consumer regulation branded an unfair trade practice.
In 2021, Commerce Secretary Gina Raimondo declared in video remarks to the U.S. Chamber of Commerce, “We have serious concerns that these proposals will disproportionately impact U.S.-based tech firms and their ability to adequately serve EU customers and uphold security and privacy standards.” This claim is of course preposterous, since the whole point of the EU initiative is to increase the enforcement of privacy, as well as fair competition.
As Sen. Elizabeth Warren (D-MA) pointed out in a letter taking Raimondo to task for her alliance with Big Tech, “This Administration has promised to engage our allies to put worker-centered trade policies in place, and to promote competitive markets and regulate Big Tech to protect consumers and workers. It makes little sense for you to go before the U.S. Chamber of Commerce, which opposes all these Administration efforts, and promise to defend U.S. Big Tech firms from competition policies designed to achieve the same goals as the Biden Administration’s policies merely because they emerge from our allies.”
More recently, in March, Senate Finance Committee Chair Ron Wyden (D-OR) and his Republican counterpart, Sen. Michael Crapo (R-ID), wrote a joint letter to President Biden. It said in part: “Regulatory efforts that discriminate against U.S. employers and their workers by exempting the EU’s domestic companies, and even other foreign companies, are both unfair and counterproductive to the purported goals of ensuring privacy, protecting consumers, and promoting national security.”
Now that the EU’s detailed rules are out, the industry campaign against them has grown more hysterical.
These claims echo tech industry talking points. A couple of weeks ago, Rep. Lou Correa (D-CA), a tech ally who succeeded the admirable Rep. David Cicilline (D-RI) as the ranking Democrat on the House Antitrust Subcommittee, harangued Attorney General Merrick Garland: “It looks like the DOJ is working to support the efforts of the Europeans in implementing the Digital Marketing Act.”
Now that the EU’s detailed rules are out, the industry campaign against them has grown more hysterical. The Federal Trade Commission and the Antitrust Division of the Justice Department are clearly aligned with the EU. They have successfully pushed back on efforts by the tech industry and its allies in other government agencies to use the pending Indo-Pacific Economic Framework to undermine regulation of tech by participating nations.
With the forceful White House competition chief Tim Wu having gone back to teach law at Columbia, his successor is Hannah Garden-Monheit, a talented professional without Wu’s national stature. It’s not clear who, if anybody, at the White House is in charge of reconciling these cross pressures into a coherent national policy.
The industry, and its allies in the Commerce Department and Congress, have escalated their pressure on U.S. Trade Representative Katherine Tai, who is also whipsawed by USTR career staff. Tai has privately but somewhat obliquely sided with the Justice Department and the FTC. She has lauded the president’s competition initiatives, but has not been willing to say publicly and forcefully that trade policy should not be used to undermine regulatory policy.
For this article, I requested an on-the-record statement of Tai’s views on this issue. I received a rather guarded statement that is cautiously on the right side of the issue, to be attributed to a USTR spokesperson: “Since day one of the Biden-Harris Administration, USTR has recognized the need to distinguish between discrimination against American companies and promoting competition. We will continue to review this legislation with our interagency partners and closely consult with the European Union.”
It’s progress for USTR to go on the record pointing out that promotion of competition is not the same thing as discrimination against American companies. Let’s hope that Tai, who was recently appointed to the White House Competition Council, is even more forceful in private meetings.
Meanwhile, Big Tech has continued to pressure the U.S. government to lean on the EU to weaken an admirable package of pro-consumer and pro-competition laws, on the grounds that the five most predatory tech giants happen to be U.S. companies. One of the most hilarious of industry talking points is the whine that the EU, nationalistically, did not include any European firms in its list of major gatekeeper companies.
The reason, of course, is that there aren’t any. Industry taking points cite the example of Spotify, a music streaming service based in Sweden. Why didn’t Spotify make the EU’s gatekeeper list? Well, one reason might be that Spotify’s market capitalization is about $30 billion. Google’s is $1.68 trillion. Amazon’s is $1.33 trillion. And so on.
Another reason is that Spotify has plenty of competition. Three of its competitors happen to be owned by Amazon, Apple, and Google.
The EU’s new competition and consumer protection regime suggests an alternative regulatory universe to the one that the tech giants have created in the United States to protect their monopolies. It could force a drastic change in their predatory business models—if it survives their intense lobbying and that of their chums in government.
